State probes Medicaid claims submitted by Signature Care Services

The company's own auditors flagged some of the expenses.

Sep. 8, 2012

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A state investigation into the Medicaid billing of Signature Care Services appears to be tied, in part, to concerns raised by the company’s own auditors.

In January, the state reviewed the Medicaid cost reports submitted by Signature for its seven Iowa nursing homes. Among the costs Signature claimed as “direct patient-care costs” were tens of thousands of dollars spent for something described only as “non-recurring expenses.”

State records indicate that the company’s auditing firm, which prepares Signature’s Medicaid cost reports, was initially evasive in explaining those expenses. Eventually, the firm sent the state emails indicating the “non-recurring expenses” actually represented repayments to Medicaid for past, unallowed expenses.

In essence, the state now alleges, the company was forced to repay Medicaid for expenses inappropriately claimed in years past, and then it attempted to bill Medicaid for part of the cost of those repayments.

In March, the state informed Signature that the company’s auditing firm was “cooperating with criminal authorities” and was stating that it would no longer do business with Signature because of what the auditing firm called “unscrupulous practices.” The auditors alleged they had submitted to the government more than 40 incorrect claims for Medicaid payment as a result of misinformation provided by Signature.

The state initially suspended some Medicaid payments it was making to Signature, but recently agreed to resume making payments while the investigation continues.

The owner of Signature Care Properties, Bruce Mehlhop, says the company “vigorously disputes” any claim of fraudulent billing.

Mehlhop, a former juvenile parole officer, said various depositions have been taken and those show evidence of “several significant factual discrepancies and inaccuracies” in the state’s case.

Roger Munns, spokesman for the Iowa Department of Human Services, said the state still is holding back partial payment on several months’ worth of Medicaid claims made by Signature. That money can be retained, he said, if the state determines the company has overbilled Medicaid.